Since Treasury Bills rates hit south, the bulls are now locking horns with bears in the equities market, still leaving the Nigerian Stock Exchange (NSE) All Share Index (ASI) northbound and looking to engineer a Santa rally or bull-run into the end of the year.
Sentiment around banking stocks remains strong and it reflects on investors’ bid cart. Chief among their picks are tier-1 lenders – Access Bank plc, GTBank plc, FBN Holdings, Zenith plc, and UBA plc. They are preferred counters by research analysts based on their dividend and yield potential.
At N10.50 per share as at Friday, November 15, Access Bank has outperformed the NSE ASI, showing a strong positive return of 54.4 percent year-to-date (YTD).
The NSE Banking Index, which provides an investable benchmark that captures the performance of most capitalised and liquid banking stocks, has seen remarkable positives lately. It gained 6.77 percent in the trading week ended November 15, 2019 while it has gained 17.06 percent this month.
The record upward trend of the ASI was limited by profit-taking action by investors during the trading session on Friday which moderated the gains. The market gained marginally by +0.03 percent.
The record upward trend of the ASI was limited by profit-taking action by investors during the trading session on Friday which moderated the gains. The market gained marginally by +0.03 percent.
This is happening barely two weeks after the CBN banned non-bank financial institutions from participating in Open Market Operations (OMO) auction. In show of supremacy of the bulls, equity investors have seen about N300 billion added to their pockets despite bouts of profit-taking activities.
Vetiva Securities expects the equities market to remain positive in the next trading session evidenced by increased transaction sizes, strong positive market breadth as well as renewed investor confidence.
“When money market rates are down, the equities market becomes attractive for better returns,” said Capital Bancorp. FBN Quest research also expects “the market to maintain the same trading pattern in the next session”.
While investors continued to bet on most value stocks, some of them have also shown resilience despite pockets of sell pressure.
“With excess liquidity in the overall financial system, and the ripples occurring in the fixed income market, we could see continued interests in the local equities,” said research analysts at Lagos-based United Capital plc.
This rally at the stock market has made stockbrokers happy, according to some of them who spoke to BusinessDay ahead of their upcoming conference. They see the upward trajectory continuing.
From N12.81 trillion in the week ended November 8, equity value has risen to N13.071 trillion as at November 15. The NSE ASI has also risen to 26,851.68 points from 26,314.49 points in the same period, representing an increase of 2.04 percent in one week and 1.87 percent this month. This record positive helped reduce equity investors’ negative year-to-date return to 1.87 percent.
IHEANYI NWACHUKWU
